China's central bank drained 60 billion yuan (8.9 billion U.S. dollars) from the financial system through open market operations Monday, with the volume of maturing securities exceeding new injections.
The People's Bank of China (PBOC) pumped 250 billion yuan through reverse repos, while 310 billion yuan of securities matured Monday, leading to a net withdrawal of 60 billion yuan.
The operations included 130 billion yuan of seven-day reverse repos priced to yield 2.45 percent, and 120 billion yuan of 14-day reverse repos with a yield of 2.6 percent.
It was the third consecutive working day of liquidity drain in the financial system.
In Monday's interbank market, the overnight Shanghai Interbank Offered Rate, which measures the cost at which banks lend to one another, dropped 8.6 basis points to 2.721 percent.
The PBOC's open market operations are closely watched by the market, as they are major tools for the central bank to manage liquidity.
Over the past year, the bank has steered clear of interest rate cuts and avoided tinkering with reserve requirement ratios, while adopting an expanded range of tools, such as reverse repos and lending facilities, for more nimble maneuvering.
The change came as authorities have to juggle the task of financial deleveraging aimed at defusing risk and curbing asset bubbles, while shoring up a slowing economy.
China's monetary policy is set to be prudent and neutral in 2017, keeping appropriate liquidity levels and avoiding large injections.
